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Will we see $1.30 today?

Copper all set to cross $8,000/T

Copper is set to continue its gains in the coming week with the prices almost certain to rise above $8,000 per tonne level.

A break above $8,043.75 would open the way to prices last seen in August 2008. Copper stocks in LME warehouses rose by a scant 100 tonnes, to 380,225 tonnes, the latest LME data showed, but as a general trend have been in decline, falling counter cycle over summer.

Raw material supply constraints are still severe, and there is potential for a further pick-up in Chinese buying, given that during the summer months, it looks as though they de-stocked.

The market is already seeing pressure this year, with globaldemand outpacing supply. The International Copper Study Group said this week that the global market for refined copper was in a 281,000 tonne deficit in the first half.

Meanwhile, India?s copper consumption is forecast to rise 15 per cent, the decade?s highest, on phenomenal growth in end-use sectors such as electricity, consumer electronics, industrial machinery, equipment and construction. The consumption growth is expected to de-accelerate in 2011 to eight per cent.

According to the latest report by credit rating agency Icra, copper use in the country is expected to grow to 650,000 tonnes by the end of the current calendar year as compared to 565,000 tonnes last year. Total copper consumption is estimated to rise to 720,000 tonnes in 2011.

Between 2000 and 2009, consumption of the red metal increased 9.7 per cent annually. By comparison, consumption declined 0.1 per cent in 2008. The slow growth in consumption was primarily because of limited domestic capacity and supply, high import duties on concentrate and finished products, inadequate investments in telecom and power infrastructure, and high prices.

Consumption growth was high till 2007, but declined in 2008 and 2009 because of a price rally and the slowdown in industrial production and construction activity. Even during the peak economic downturn of 2009, consumption rose 9.5 per cent to an estimated 564,000 tonnes, driven mainly by huge infrastructure spending and continuous growth in the manufacturing sector.

The annual per capita consumption of copper in India is 0.47 kg, which compares poorly with China?s 5.4 kg and the world average of 2.7 kg.